A huge goose egg for the net neutrality crowd

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As an economist, I often ponder the following question: Why do so many people fear big business but love big government?

The answer, of course, lies with a fundamental misunderstanding of economics, and how both the market and government work. People seem to think that big corporations have enormous power and control over, well, just about anything one wants to dream up.

My favorite these days is that big corporations control news and information, and threaten to use this control for nefarious purposes. From this springs the net neutrality movement to have government regulate the Internet. Though not explicitly put this way, the net neutrality agenda is to take the so-called power from big business and hand it over to big government.

But it turns out that the net neutrality movement really wants to take power from consumers and hand it over to big government. After all, how does a business become “big”? It can only do so by offering consumers goods or services at better prices and/or improved quality. If a business does not serve its customers well, it has no chance of becoming a big business. In the end, consumers decide which companies become big, which big firms remain large, and which ones falter and ultimately fail. In the marketplace, the ultimate power truly is with the people.

Therefore, it was refreshing to see the voters strike a blow for the market and the power of the consumer on November 2. In his November 8 Wall Street Journal column, L. Gordon Crovitz reported: “As a reminder of unpredictability in politics, consider what happened when the Progressive Change Campaign Committee last month announced that 95 candidates for Congress had signed a pledge to support ‘net neutrality.’ The candidates promised: ‘In Congress, I’ll fight to protect Net Neutrality for the entire Internet — wired and wireless — and make sure big corporations aren’t allowed to take control of free speech online.’ Last week all 95 candidates lost.”

In the words of President Obama, that’s a “shellacking.” When talking about 95 congressional races, laying a big goose egg is astounding.

Apparently, the voters overwhelmingly saw the inherent problems in relying on politicians and their appointees to, in effect, decide how broadband networks should be operated. That’s not freedom, as proclaimed by the net neutrality crowd. Instead, it’s government central planning, and a surefire way to weaken innovation, investment, quality and service on the Internet. Keep in mind that while businesses must serve consumers to thrive, that is not the case with the political class. Instead, they have every incentive not only to serve various special interests, but also to acquire bigger budgets, staff and power.

That’s a reality worthy of worry — especially for the seemingly countless small businesses that have been able to emerge and grow due to the expansion and advancements in broadband technologies — and many voters on November 2 seemed to recognize the threat.

The next step is for Congress to step in and stop the FCC’s attempt to go around elected officials and impose a regulatory regime conjured up in the 1930s on the rapidly developing and innovating broadband networks of the twenty-first century. The FCC has no such power over broadband networks, and our elected officials need to remind these political appointees of this reality in clear terms.

Raymond J. Keating serves as chief economist for the Small Business & Entrepreneurship Council.

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